Britain is facing two ‘lost decades’ for wage growth in the wake of Rachel Reeves‘ tax and spend Budget.
Average wages are set to be just £13 a week higher in 2028 than they were in 2008, according to the Resolution Foundation.
The grim conclusion from the left-leaning think-tank underlines the scale of the difficulties the country has been going through since the credit crunch.
Obstacles have included turmoil over Brexit followed by the pandemic and cost-of-living crisis.
But the Chancellor has conceded that her massive £25billion raid on employers’ national insurance will further suppress pay rises for workers.
Businesses have been warning of job cuts, with some bosses in tears on TV as they wrestle with how to keep their firms running.
In its assessment today, the Resolution Foundation said the overall £40billion tax raid was the biggest ever in terms of money.
Britain is facing two ‘lost decades’ for wage growth in the wake of Rachel Reeves’ tax and spend Budget (pictured, the Chancellor and Keir Starmer on a visit to Coventry today)
The Resolution Foundation think-tank highlighted that taxes are heading for the highest level since records began
Average wages are set to be just £13 a week higher in 2028 than they were in 2008, according to the Resolution Foundation
In its assessment today, the Resolution Foundation said the overall £40billion tax raid was the biggest ever in terms of money
As a proportion of GDP it is thought to have been slightly smaller than the 1993 Budget in the wake of Black Wednesday.
The think-tank’s report said higher inflation and weaker growth due to higher taxes on employment came on top of an ‘already challenging outlook’.
‘As a result, by 2028 real wages are expected to have grown by just £13 a week over the past two decades,’ it said.
Mike Brewer, Interim Chief Executive of the Resolution Foundation, said Ms Reeves was ‘prioritising extra spending’.
‘The short-term effect of these changes will be better funded public services – not just across schools and the NHS – but, critically, also in our justice system,’ he said.
‘But families are also set for a further squeeze on living standards as the rise in employer National Insurance dampens wage growth.
‘With Britain finally turning the page on its longstanding failure to invest thanks to a £100 billion boost to public capital spending, the hope is that this short-term pain will eventually turn into a long-term living standards gain.
‘But if it doesn’t, future Budgets won’t be any easier to deliver, especially if further tax rises are needed.’
The think-tank pointed to the OBR’s estimates that real pay will be suppressed by Ms Reeves’ move on NICs